China’s central bank has rushed to pump money into the stalling banking system but markets across Asia still fell sharply amid fears that the world’s second-largest economy faces a credit crisis.

Cash rates on China’s money markets jumped after the move by the People’s Bank of China (PBOC) to ease a liquidity squeeze on banks. Both the Shanghai Composite Index and Hong Kong’s Hang Seng Index also fell amid concerns over structural problems in China’s financial system.

The Chinese seven-day bond repurchase rate, which essentially measures liquidity in the financial system, climbed to 7.6pc its highest since fears over a banking crisis in China first emerged over the summer.

State media in China had reported that the PBOC has unexpectedly pumped $33bn (£20bn) into the domestic money market through what it refers to as “short-term liquidity operation”.

“The focus is again on China where there is plenty of discussion on the squeeze in interbank funding markets,” said Deutsche Bank in a note to investors Friday.

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“The repo rate is now higher than yesterday amid market talk of a missed payment at a local Chinese bank. This is something to monitor over the next few days.”

Fears over a looming Chinese debt crisis spurred by a poorly regulated and opaque financial system stoked fears over the summer that the Asian powerhouse could finally be on the brink of a sharp slowdown in growth.

Much concern also surrounds what has become known as the “shadow banking” system that allows the Chinese to borrow money beyond their means.